Created more than twenty-five (25) years ago, the credit card dispute process has seen many changes leading to a more complex system that is difficult to learn. Today, it typically takes a chargeback analyst twelve (12) months to become proficient in a job that statistics show they will leave generally within eighteen (18) months. In many companies, being a chargeback analyst is an entry-level position which requires an extensive knowledge in a number of areas including, for example, forty-four (44) U.S. chargeback reason codes, forty (40) international chargeback reason codes, differences between T&E and non-T&E disputes, differences between card present and card-not-present disputes and possible pre-compliance situations.
While new fraud monitoring programs, alert systems, system edits, and changes to operating regulations have resulted in substantial reductions in chargebacks over the past decade, no comparable effort has been invested in the clerical and procedural aspects of dispute processing.
The current credit card dispute process is quite antiquated and fraught with a number of major issues. For example, the current dispute process is a paper and labor intensive process. Physical evidence is usually required today to initiate a dispute. Evidence may take the form of a copy of the sales draft or a cardholder's signature on a dispute letter even though a signature provides limited value in the majority of disputes that are not fraud related. Furthermore, all parties may be required to provide written documentation at any point throughout the dispute process. Reliance on paper and postal delivery results in a slower process in resolving disputes as there has to be extended time frames to deliver and receive documentation, and the possibility always exists that the documentation could be lost in transit. Hence, retrieval and distribution of draft copies and obtaining cardholder letters is time-consuming, costly and labor intensive.
The collection of facts pertinent to a particular dispute is also difficult. Cardholders are generally required to provide signed letters before disputes can be initiated. Cardholder dispute letters often contain many facts that are not relevant; or conversely, these letters may be missing information needed for a particular dispute. Furthermore, many issuers use their own form letters. These letters cause difficulties for merchants by providing inconsistent information in different formats. Acquirers and processors also use different proprietary letters to communicate with issuers.
The paper and labor intensive process often translates into customer dissatisfaction. Cardholders and merchants generally do not like to supply written documentation. They often view requirements for written documentation as poor customer service. In addition, most cardholders and merchants do not understand the dispute process, documentation needed to support the process, and why they may be contacted multiple times for additional documentation.
The current credit card dispute process is also time consuming for all of the parties involved. The more complex cases may take over 300 days to reach resolution, putting issuers well beyond any federally regulated time frames in which they must resolve dispute claims. Cardholders and merchants are frustrated when they have to wait a lengthy amount of time for resolution, and customer service analysts are not meeting the level of service expectations set by their customers.
The current dispute process is also generally viewed as being difficult to follow and use. For instance, chargeback rules differ by market segment—e.g. retail, mail order/telephone order and T&E—and between U.S. and international rules. At the present time, the U.S. region has forty-four (44) domestic chargeback reason codes and the international rules have an additional forty (40) chargeback reason codes. Some of these reason codes are ambiguous, while others overlap. Issuers' ability to choose a chargeback right depends on a combination of these factors. An extensive training period from six months to a year is required for employees to become proficient at working with the chargeback process. Furthermore, the current process can be litigious, requiring affidavits, arbitration and litigation.
Chargeback processing also continues to be paper-oriented, manually intensive, complex, mail-dependent and lengthy. It is estimated that hundreds of millions of dollars are spent every year to resolve credit card disputes and handle chargeback processing. Additional millions are incurred in connection with merchant expenses and write-offs for failure to meet regulatory requirements. Several factors contribute to the high cost of the current dispute process including, for example, failure to process disputes within regulatory timeframes are costly, member write-offs due to failure to meet regulatory requirements, member write-offs due to high cost of processing, member write-offs due to chargeback minimums, merchant expenses, the costly, lengthy training process for dispute analysts compounded by frequent staff turnover, and variances among different chargeback rules increasing the liability exposure for issuers and acquirers.
Hence, it would be desirable to provide a method and system that is capable of facilitating credit card dispute resolution in a more efficient and cost-effective manner.